Galloping industry may prove slow Oct one-off
The industrial sector is not hitting the slowdown mode just yet. The slowdown in industrial output in October, when the index of industrial production (IIP) slipped to 6.2%, was an exception.
By Subhomoy Bhattacharjee, TNN |
NEW DELHI: The industrial sector is not hitting the slowdown mode just yet. The slowdown in industrial output in October, when the index of industrial production (IIP) slipped to 6.2%, was an exception.
Government officials sitting down for the Budget calculations can, instead, take heart from related data, that shows the sector would possibly turn in a much-better performance in November. The trend growth rate of IIP for April-October 2006 is 10.3%.
The latest merchandise trade figures for November, released last week, show a 34% year-on year-growth. There has also been a 40% rise in non-oil imports. This shows the domestic industrial sector is growing at a fast clip. The demand for non-oil imports arises basically from the industrial sector, whose demand for raw materials makes up most of the category.
According to UTI Bank chief economist Saugata Bhattacharya, the numbers indicate that industrial output growth will have bounced back in November. Planning Commission principal adviser Dr Pronab Sen says the November IIP figures could show a rise that will be sharper than the trend rate of growth. In November last year, the IIP index had slipped to 214.8 from 223.9 in October.
The continued upswing is also visible in other indicators. The demand for non-food credit has risen 30.7% year-on-year till the end of first week of December. In absolute terms, it has risen Rs 241 billion. The third installment of advance direct tax also shows the same trend, climbing 44% over last year.
ADVERTISEMENT
Here too, the demand for non-food credit emerges largely from the industrial sector. While the services sector makes up 60% of the Indian economy, the demand for credit is far more in the manufacturing sector. The robust rise in non-food credit also shows that the industrial sector is purring along comfortably.subhomoy.bhattacharjee@timesgroup.com
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
